ZIM Integrated Shipping Services Ltd.

Ladies and gentlemen, thank you for standing by. I am Irene, your chorus call operator. Welcome and thank you for joining the integrated shipping service Q3 2022 earnings conference call. Throughout today's recorded presentation, all participants will be in a listen only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Press the star key followed by zero for operator assistance. I would now like to turn the conference over to Ilana Holtzman, Head of Investor Relations. Please go ahead.

Thank you, Irene, and welcome to ZIM's third quarter 2022 financial results conference call. Joining me on the call today are Eli Glickman, ZIM's President and CEO, and Xavier Desclios in CFO. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements regarding expectations, predictions, projections, or future events or results. We believe that our expectations and assumptions are reasonable. We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ, including the Thank you, Ilana, and welcome, everyone.

today's home. The third quarter and nine months performance reflects continued solid execution and trends in our financial results and profitability. These results are consistent with our expectation for market normalization beginning in the second half of 2022, following an extended period of historic profit. However, Over the past several weeks, we've seen a steeper decline in freight rates than we previously assumed, as consumer demand in the US and elsewhere has softened. The pace of normalization has accelerated, and based on this evolving marketing environment, we've revised our full-year 2022 focus. For 2022, We now expect to generate adjusted EBITDA between $7.4 to $7.7 billion, compared to a previous guidance of $7.8 to $8.2 billion, and adjusted EBIT between $6 billion to $6.3 billion, compared to the previous projection of $6.3 to $6.7 billion. I note that based on our current guidance, 2022 adjusted EBITDA and adjusted EBIT are expected to be once again all-time records. Current market conditions illustrate the volatile and fast-paced nature of our market. The outlook for the global economy is very uncertain as we see various macroeconomic and geopolitical risks, rising inflation and interest rates, energy crisis in Europe, the extended war in Ukraine, just to name a few. Externally spending is down, and now when consumer spending on services can return to normal, demand for durable goods may be hurt even harder. All these felt challenging outlook for container shipping, particularly given the scheduled vessel deliveries planned for next year in 2024. Xavier, our CFO, will further discuss our guidance in the current market environment in greater detail later on the call and the potential impact of different factors, including IMO 2023 on our business. In accordance with our dividend policy to pay 30% of quarterly net income, our board declared a Q3 dividend of approximately $354 million of $2.95 per share. We continue to return substantial capital to shareholders, which remains a priority as we seek to create long-term value and enable shareholders to directly benefit from our strong results. So far, on account of 2022 results and including this quarter, we have returned over $1.26 billion or $10.55 per share in dividends. During the first nine months, As you can see in slide number four, revenue grew by 43% to $10.4 billion as compared to the same period in 2021. Driven by elevated freight rates and ZIM depreciated strategy, our adjusted EBITDA increased 55% and net income increased 43% compared to the nine-month period in 2021. Most importantly, While market conditions remain dynamic, we continue to deliver strong EBITDA and EBIT margins, highlighting our focus on profitability. Nine months 2022 adjusted EBITDA margin improved from 58% to 63%, and adjusted EBIT margin improved from 51% to 54%. Notably, our balance sheets balance sheet also continues to be very strong with total shareholders' equity of $5.8 billion at the end of the quarter. In the third quarter of 2022, our revenues grew 3% year-over-year to $3.2 billion, and we generated adjusted EBITDA and net income of $1.9 billion and $1.2 billion, respectively. Adjusted EBITDA and EBIT margin for the quarter was 60 percent and 48 percent, respectively, though lower than in Q3 2021. Going to slide five. In light of the fundamental changes in market conditions, It is important to highlight key elements of Zim's strategy, our commercial and operational agility. We believe these differentiators enhance our position to operate in a more normalized trade rate environment. Over the past two years, we've been proactive to best position Zim for long-term success as we continue to focus on optimizing profitability for the benefit of our shareholders. On slide five, we list several initiatives that we have previously discussed. Examples on the commercial side include our network of e-commerce lines to Australia and New Zealand and the U.S. East Coast. Our focus on the intra-Asia trade, which is a very dynamic trade and the world's largest trade in volume terms. and the expansion of our car carrier activity, which we intend to grow even further. We have demonstrated our ability to adapt to prevailing market conditions and capture commercial opportunities. Today, our commercial presence is more diversified, allowing us to benefit from and balance between varying trade dynamics. Yet, we remain committed to our global niche strategy and operate in trades we find the most attractive and where we can establish a competitive position. We believe this agility will provide us with significant resilience in this new market environment. Operationally, we remain very focused on securing the most competitive and efficient fleet possible to support our commercial strategy. As a reminder, we enter into our first agreement for the long-term charter of 10-15,000 TU vessels in February 2021. These vessels are ideally suited to serve on our core Asia-to-US East Coast service. This charter agreement will have a positive impact on our core structure next year as we take delivery of the vessels throughout 2023. We also expect to be the first liner to operate LNG vessels on this trade, offering ZIM an important commercial differentiating and enabling us to immediately reduce the carbon footprint of ZIM and its customers. Most recently, we enter into an important agreement with Shell to secure the supply of LNG and efficiently bunker these vessels. From our digital investment, I would highlight the progress of Ship Forward, our digital freight forwarder, which we launched about a year ago. As a reminder, Ship Forward is a pure digital solution on the front and back end, Targeting SMEs from the US and Canada, shipping from China and Vietnam. This capability offers an important efficiency compared to other industry players. While ship forward still has very modest revenue at this time, its technology has proven itself and the potential in this multi-billion market is clear. On that note, I will turn the call over to our CFO, Sophia, for his remarks on our financial results and additional comments on the market.